Thursday, May 3, 2012

The Difference between a Will and a Pour Over Will

What does "living trust will" mean? It's not really a legal term. But, it is a term that is often used when people start looking into living trusts. People are used to having a will distribute property after the death of the person making out the will. A trust also distributes property after a person's death, which can lead to the confusion and the use of the term "living trust will."
In a sense, a living trust is a substitute for the standard will. A living trust and a will are two separate items. So, when the term "living trust will" is used, as a lawyer, I am not sure what is being referred to.A living trust is a different legal document from a will. A special type of will, a "pour over will," always accompanies a living trust. Using a pour over will is a safety device implemented with living trusts.
Sometimes living trusts are known as --"living revocable trust" or "revocable living trusts". The key here is that they are revocable. That means that the maker of the trust can revoke the trust and move everything back to status quo anytime he or she wants. Living trusts are used to avoid probate which will give their heirs a larger inheritance and prevent them from having to pay estate taxes. A revocable living trust only avoids probate if it is properly managed by the person who sets it up.
Even though a trust can avoid probate, most do not. Some in the legal community are coming out in opposition to living trusts since so many clients are not really getting the probate protection they thought they were getting. The trust is not the difficulty. The way attorneys are educating their clients is the problem. Clients will not know how to avoid probate unless they are educated on how to "use their living trust.
A living trust will avoid probate if it is handled appropriately. If it doesn't, then the deceased's assets will need to be probated. Now the family has to endure a drawn out legal proceeding in probate court. When there is a will, the probate court will use it to help them make decisions throughout the probate proceedings. If there isn't a will, the probate court will treat the case as an "intestate" proceeding. Intestate means that there isn't a will.
When you get a revocable living trust, you should also get a pour over will. The probate courts can use the pour over will to direct them through the process if probate becomes necessary. The pour over will won't be needed if the trust works properly and actually avoids probate.
Pour over wills don't make a distribution of the property, as standard wills do. Once the property is probated, a pour over will directs the court to "pour over" all of the property into the revocable living trust, so that it can be distributed according to the terms of the living trust. In his new book, Guaranteed Millionaire, Lee R. Phillips discusses in detail revocable living trusts and pour over wills.

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